P L D 1954 Lahore 376 (PLP)

The questions which require decision are only two. The first is whether there was a valid lease deed and the second is whether the plaintiff is entitled to any amount by way of compensation for use and occupation. The first question would not at all have been difficult of decision for section 47 of the Municipal Act requires a writing and there is no writing at all, but the point is conceded by the learned counsel who appears for the Municipal Committee, and any claim on the basis of a valid lease has been abandoned before me. There remains, therefore, only a question whether any and if so what amount should be paid by the defendant as compensation. It is not denied on behalf of the defendant‑appellant that throughout the period beginning from the 1st of April 1948 and ending on the 31st of March 1949 he was in possession. It was his case that he had secured a lease of these plots in the second auction. If this were correct, the question of compensation for use and occupation would not arise. However, though there is proof of the fact that there was a second auction, because of the statement of Abdul Majid Overseer of the Municipal Committee who has appeared as P. W. 1, there is no order or resolution of the Municipal Committee on the file in respect of the second auction and it vas not even alleged that any lease deed was executed in consequence of the second auction. It is clear that even if the fact of the second auction be accepted, the second lease would also be hit by the provisions of section 47 and would not be binding. In view of this, learned counsel for the appellant has, during argument, conceded his liability to pay a reasonable amount as compensation for being in possession for the period in question. The real point to determine is the amount that tile appellant ought to pay Learned counsel for the appellant contends that he should pay according to the benefit that he may have received. Learned counsel for the respondent contends that he had agreed to pay Rs. 632 and he ought to be made to pay that amount without reference to the benefit that he received. He relies upon certain judgments of this Court for the argument that this will become a case of implied contract and as it is an implied contract, the payment should, he argues, be according to what was stipulated. He relies, in the first instance, on Dula Singh v. Municipal Committee, Sargodha (38 P L 8141.) a Division Bench case of our Court. In that case a tonga‑stand had been leased by a Municipal Committee. The lease was found to be invalid on account of the provisions of section 47 of the Punjab Municipal Act. It was held that the party must pay for what he had actually received and enjoyed. This part of the statement of law does not support learned counsel for the respondent Learned counsel relies, however, on a sentence in the judg ment which runs: "It was held in A I R 1929 Lah. 742 that although a contract between a Municipal Committee and a third party had not been reduced to writing in accordance with the provisions of section 47 of the Punjab Municipal Act, yet if the Committee had performed its part of the contract and the other party had derived benefit therefrom, he must pay for what he had actually received and enjoyed as if there was an implied contract between the two for payment, and a suit by the Municipal Committee for the same was maintainable." Learned counsel urges that the words "as if there was an implied contract" show that the learned judges put the case on a constructual basis. There is no discussion in the judg ment as to what exactly is covered by the term "implied contract". It had not been contended in that case that the sum stipulated should be paid because there was an implied contract to pay that sum. The sentence relied upon itself refers to what was "actually received and enjoyed". That the learned judges had no intention of awarding anything more than the benefit received is also clear from another sentence which occurs at the end of the judgment. It reads:‑ "As the contract was not reduced to writing and as the respondent is being given a decree because the appellant has derived benefit and muse, therefore, pay for what he has actually received and enjoyed, we are of opinion that this is not a fit case for awarding interest by way of damages." This case can hardly be an authority for the proposition put forward. The next case relied upon by the learned counsel is Municipal Committee. Gujranwala v. Fazel Din (I L R 11 Lah. 121,) which had been referred to in the first case. In that case the Municipal Committee of Gujranwala leased out the sweepings of the town for a period of one year, in lieu of a Rs. 14,

900. There was a part payment by the lessee and a suit was brought to recover Rs. 5,175, the balance of the lease‑money. There was a preliminary issue as to whether the suit could proceed because no deed had been executed in accordance with the provisions of section 47 of the Municipal Act. The trial Court dismissed the suit on the preliminary issue. On appeal to the High Court it was conceded on behalf of the Municipal Committee that there was no valid contract, but it was pleaded that the defendant should be liable for compensation. It was held that if any party to a contract has derived benefit therefrom at the expense of the other he must pay him for what he has actually received and enjoyed as if there was an implied contract between the two for payment. There do occur in the judgment the words "as if there was an implied contract" but there is no discussion at all in the judgment as to the amount which the party was to pay. The contention raised before me was never placed before the learned judges in that case. It is obvious that they only mean to hold the defendant liable for "what he actually received, and enjoyed", and when they speak of an implied contract for payment, they are referring to the implied contract to pay for what the defendant received and' enjoyed and not to any implied contract to pay the sum that he stipulated to pay while entering into the invalid contract. Municipal Committee, Lahore. v. Miran Bakhsh (I L R 13 Lah. 561.) is the next case relied upon. In that case it was held that the suit for rent was not maintainable, but that under section 70 of the Contract Act compensation could be claimed. This authority is in fact opposed to the contention of learned counsel for the respondent. It says that the plaintiff is entitled to compensation on equitable considera tions, At another place, the words used are "liable in justice to compensate the plaintiff". When dealing with the amount of compensation the fact that a toll had been erected at a place which would interfere with the beneficial enjoyment by the defendant of the leased property was taken into consideration and the amount payable as compensation was reduced. The respondent can derive no benefit from the use of the words "as if there was an implied contract" in the two judg ments mentioned above. The words "implied contract" are capable of two interpretations. The first is that for which reference may be made to section 9 of the Contract Act. This section provides that a contract may be express as well as implied. When used in this sense, an implied contract is as good as an express contract. It has all the incident of contract and if a contract of a particular kind be only possible at law in a particular form it cannot be said that whereas on account of the absence of formalities an express contract would become invalid an implied contract will still remain valid. That would be nullifying the object of the Legislature. If the contracts which are invalid in view of section 47 of the Municipal Act were still to remain valid as implied contracts, section 47 of the Municipal Act would cease to have any effect. There is, however, another sense in which these words are sometimes used and that is in respect of relations which resemble contracts. These relations are dealt with in Chapter V of the Contract Act. It is sometimes said that these are contracts implied by law, the meaning being that although there is no contract between the parties, the law creates an obligation similar to a contract. Section 70, which was relied upon in the case before me and also in Municipal Committee, Lahore v. Miran Bakhsh (supra) deals with a situation where one person does something for another which he does not intend to do gratuitously. The provision is that the person who receives benefit is hound to pay compensation to the person who does something for his benefit. The section j, does not, however, say that if a person makes an agreement which turns out to be legally unenforceable that person is still bound to make good the agreement. The obligation which the section implies arises out of and is in accordance with the benefit received. I agree, and even learned counsel for the appellant concedes, that ordinarily the sum which a person agrees to pay for use of property may be a criterion for determining the benefit he received from the use, and in the absence of any other material on the record may be made the basis of a decree for compensation. However, it is only a piece of evidence and is liable to rebuttal. In the present case, which is an exceptional one, there is strong rebutting evidence on the record showing that the sum agreed would not accord with the benefit received. As already stated, the case for the defendant is that the Municipal Committee cancelled the lease because the bidders had foolishly made very high bids on account of rivalry. We find from the evidence of Abdul Majid Overseer that in the years previous to the one in dispute these two plots had been leased only for a sum of about Rs. 10. a year. We find again that in the subsequent year, i.e., 1949‑50, these plots were leased only for a sum of Rs.

14. This lends support to the explanation given by the defendant as to the cancellation of the lease by the Committee. No reason appears on the record as to why the lease‑money for these plots should have particularly gone high in the relevant year, I have, therefore, to discard the amount of Rs. 632 agreed upon between the parties as a criterion for assessing the compensation. Learned counsel for the res pondent argues that even if in the previous years and the subsequent years these plots were being leased at small sums, still it was possible for the Municipal Committee, in the year in dispute, to obtain a big sum by taking advantage of the rivalry between bidders, and, therefore, the Committee should be held entitled to the sum which it could have thus secured. Assuming that the proposition of law involved in this con tention is correct, the facts which it assumes do not exist. I have already stated that the Municipal Committee had cancelled this lease and had re‑auctioned it. We find from the evidence of Abdul Majid Overseer (P. W. 1) that in the second auction these two plots fetched Rs. 5 only. Learned counsel for the respondent says I should not accept the statement of this witness because it is not supported by any record. I do not agree. He is an employee of the Municipal Committee and was a witness for the Committee. If he had stated something which was not correct, it was the duty of the Municipal Committee to produce other and better evi dence to show that facts were otherwise. No such effort was made. There is no duty cast upon the defendant to lead any further evidence on this point in view of the admission of a witness for the Committee. If I keep out of consideration the amount which the defendant agreed to pay, the damages can only be assessed at Rs. 5 and already the defendant has paid Rs.

60. Learned counsel for the plaintiff‑respondent argued that the question of quantum of damages was a question of fact and that as the learned District judge had found that the proper compensation to pay was Rs. 572, I should not inter fere with that finding. Had the learned District judge, on a consideration of the evidence in the case, found that the loss which was caused to the Committee, or the benefit which was derived by the defendant, from the plots in question, amounted to a particular sum, that would be a finding of fact. The learned District judge has not, however, gone into the question of real loss or real benefit. He regarded the defendant as bound by his promise. He says:‑ "The question of damages for use and occupation does not arise directly in this case. The plaintiff enjoyed the use of both the plots in question for the full period of one year. He had taken the lease of these plots for a sum of Rs.

632. He had paid Rs. 60 to the plaintiff. There remained a balance of Rs.

572. He must pay that amount to the plaintiff." That is the first finding of the learned District Judge. He then proceeds to say that even if a question of damages does arise, the defendant had offered to take these plots for Rs. 632 and, therefore, is liable to pay. He says:‑ "He offered to take the plots on lease for Rs.

632. That offer was accepted by the plaintiff. Tile defendant is thus bound to pay the whole amount of the lease in question, even if the question of damages for use and occupation arises in this case.' There is no true discussion as to what the plaintiff would get if these plots were leased out in the relevant year. There is no discussion as to why the lease money of tile previous years as well as the subsequent years should not be taken into consideration. As a matter of fact in the judg ment of the learned District Judge no reference at all to the lease money for the previous years or the subsequent year is made. The basis of the Learned District Judge's judgment is the promise and not the amount of benefit received. This appeal is, in the circumstances, accepted and the plaintiffs suit dismissed, but the parties are left to bear their own costs throughout. A. H. Appeal accepted.